Tags: NRF | French | retail | McArdle

NRF's French: Retailers Respond to Slow Season

By    |   Tuesday, 02 Dec 2014 07:59 AM

On Cyber Monday, David French, senior vice president for government relations at the National Retail Federation (NRF), appeared on C-SPAN's Washington Journal to talk about the results of Black Friday, the state of the economy as seen by retailers and the implications of all this for the legislative agenda during the lame duck session and the new Republican Congress.

With the economy supposed to have turned thanks to quantitative easing and gas prices in decline, what happened? Was the weather too bad in some places and too good in others?

French acknowledged that figures are down, but he attributed this to a strengthening economy and to savvy consumers realizing that they can get deals throughout the fall shopping season without having to point to specific days like Black Friday and Cyber Monday. He said that 50 percent of Americans went shopping during the weekend, the "retail Superbowl," which amounted to 133 million versus a predicted 140 million shoppers, and they spent an average of $380.

Consumers saw that promotions started ahead of Black Friday. He might have referred to the effect of Wal-Mart leading the way by extending the season backward into Thanksgiving, but French observed what he called a "spreading out" of promotions through the season. He also spoke of strong seasonal employment, amounting to 800,000, with especially strong demand for help in some areas.

C-SPAN's John McArdle referred to NRF's press release stating that shoppers are making increasing use of smart phones, and he asked whether it is safe to use these devices. French assured viewers that the security of customer data is "paramount." He estimated that 25 million shoppers would use smart phones on Cyber Monday, and this will be aided by websites specially optimized for smart phones.

McArdle followed up with a specific question about reports of data and identity theft. French responded that 20 percent of payment terminals can now handle cards with security chips, and he called existing payment card technology dated and fraud-prone. This writer would add that during Senate Banking Committee hearings last year the card issuers and retailers blamed each other and offered little hope for an early resolution of the varied threats to payment security.

French said the card industry has pledged to get chip cards in place this year, by which he means 2015, as existing cards expire. He said that while the card industry has adopted a format called "chip and choice," retailers are calling for a more secure "chip and pin." French argued that the card industry has been urging for over a decade that the card issuers adopt new technology that has been available in Europe for at least 20 years.

This writer would point out that if the strategy of card companies employing legacy technology is problematic, it is not reflected in the stock prices of Visa (V) and MasterCard (MA), both of which are selling near all-time highs, with price-earnings ratios of more than 30 and very widely held by institutions (92 percent for Visa), and this is after a prolonged period of sluggish economic growth.

When a caller from New Hampshire reported that the state had experienced power outages that must have affected retail sales, French agreed but was not moved to elaborate.

Roughly halfway through the interview, McArdle brought up the Marketplace Fairness Act (S. 336/H.R. 684), which French said "would allow states to collect sales taxes that are due on purchases made by consumers in those states from remote sellers in other states." The Supreme Court had ruled in 1992 that states lacked the power to collect these taxes and that it was up to Congress to change the law to resolve this.

While McArdle noted that Sen. Ted Cruz, R-Texas, is opposed to the legislation, French expressed support. He suggested that legislators are reacting viscerally to tax legislation, and he contended that existing practice effectively subsidizes Internet competitors of Main Street retailers.

McArdle posted an op-ed piece in the Washington Times by Sen.-elect Steve Daines, R-Mont., opposing the bill, and it appears that there are Republicans on both sides of this issue.

(Archived video can be found here.)

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Robert-Feinberg
On Cyber Monday, David French, senior vice president for government relations at the National Retail Federation (NRF), appeared on C-SPAN's Washington Journal to talk about the results of Black Friday.
NRF, French, retail, McArdle
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2014-59-02
Tuesday, 02 Dec 2014 07:59 AM
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